Disrupting the Health Care Industry: Choice Through Competition

The most important driver of revolutions in price and quality comes from new companies entering a market. But numerous rules and regulations have made health care into a uniquely uncompetitive market. A revolution in health care will require eliminating the restrictions that prevent new entrants to the market.

But it's rare to hear of a new and disruptive health care provider that has made something better, faster, or cheaper. Why is that?

In short, it's because health care is a uniquely uncompetitive market.

Take price visibility - when consumers can compare prices, it forces businesses to compete. But in health care, you almost never know what you owe until after a service has been performed.

The most important driver of revolutions in price and quality, comes from NEW companies entering a market.

But we've passed thousands of laws and regulations that make it next to impossible for new competitors to offer medical services at a lower cost.

For example, health care providers in 35 states must obtain “certificates of need” in order to open a new hospital or clinic, or even make major purchases. But the boards that grant them permission explicitly protect existing providers, at the expense of new competition.

The rules that regulate the provision of health care are set up to prevent new and innovative companies from offering better, more cost effective services.

If we want a revolution in health care, we should think more about expanding supply.

And to do that, we need to identify and eliminate the restrictions that prevent new entrants to the market.